vietnam cotton and products update commodity report 2016 · volume and 1% in value over my...

of 17

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY

USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT

POLICY

Date:

GAIN Report Number:

Approved By:

Prepared By:

Report Highlights:

Post estimates that cotton planted area in Vietnam likely drop to less than 1,000 hectares. Post revised

its estimate of cotton imports to Vietnam in MY2015/2016 down 121,000 tons to 998,800 tons (or 4,581

million bales), from the previous forecast of 1.17 million tons, which was calculated based on the

average 5-year growth. This situation made cotton exports to Vietnam in MỴ 2015/2016 up 7% in

volume and 1% in value over MY 2014/2015. In MY 2015/2016, U.S. cotton continues to capture the

market with a dominant share of 42%. In MY2016/2017, Vietnam’s cotton consumption is projected to

continue rising at a strong pace.

Kiet Vo

Gerald Smith

Commodity Report 2016

Cotton and Products Update

Vietnam

VM6080

12/20/2016

Required Report - public distribution

of 17

Commodities:

Author defined:

SITUATION AND OUTLOOK

Textile Industry

Vietnam is now ranked among the world’s top five textile and apparel-exporting countries. Despite

difficulties in the global economy, the growth pace of Vietnam exports of textile and apparel products

continued strong in calendar year 2015 with an export value of $27.2 billion - an increase of 9.43

percent over 2014, slightly lower than the $28-billion target. The United States remains the largest

market for the Vietnam textile and garment industry. In 2015, Vietnam garment exports to the U.S.

increased 11.5 percent to $10.9 billion, accounting for 40.3 percent of its total export value. Other

important international markets for Vietnam apparel products include the EU (12.5 percent), Japan (10.2

percent) and South Korea (7.8 percent).

Currently, Vietnam’s textile and apparel industry continues to experience robust growth due to sizable

number of investments from both foreign and local investors. The investment is visible across the

supply chain including spinning, weaving and knitting, dyeing and finishing, and garment making.

Newly established and expanded investment projects have been made to capture opportunities offered

by free trade agreements that Vietnam has signed with its trade partners, such as the Trans-Pacific

Partnership Agreement (TPP), the Free Trade Agreement with the EU, the Asian Economic Community

(AEC) and FTA Vietnam – Korea. Vietnam’s textile and apparel exports in 2016 were projected to rise

by 12 percent to $29.5 billion to $30 billion. However, statistical data shows that this ambitious target

may not be reachable - exports in the first ten months reached $23.3 or 78.9% of the target. This reality

has caused the industry to revise its 2016 export target down to $28 billion, same as the 2015 target.

Additionally, a lower growth rate in the textile and apparel sector is also responsible for the revised

export target. In 2017, textile and apparel export growth is projected slightly up from 5% to 7%

compared to the industry’s routine two-digit growth.

In 2015, foreign direct investment into Vietnam reported by the government reached $22.75 billion, an

increase of 12.5 percent year on year, of which an estimated amount of $2 billion was channeled into the

textile and garment industry. Foreign capital inflows and investments were directed at: Hyosung Dong

Nai (Turkish investment capital of $660 million), Polytex Far Eastern Vietnam (Taiwanese investment

capital of $274 million), Ilshin Vietnam (Korean investment capital $177 million) and Worldon

Vietnam (Hong Kong investment capital of $160 million). Replacing outdated spindles is increasing the

number of new and existing spinning mills being registered in 2016. The increasing number of

spindles would also create a strong demand for cotton. It is estimated that Vietnam annual spinning

capacity reached 990,000 tons at the end of 2015, up about 10 percent over 2014.

Cotton

of 17

In 2016, FDI flows into Vietnam are reported at $18 billion, down 10% over the same period last year.

Similarly, investment flow into Vietnam’s textile and garment industry is also reported less than 2015.

However, this decline is not a threat to the industry’s development because large investment projects

started in 2015 are still under construction.

Table 1: Vietnam Textile/Spinning Industry Overview

2012 2013 2014 2015 2016*

Total Number of Spindles 5,100,000 6,000,000 6,100,000 6,300,000 6,500,000

Total Number of Rotors 103,348 103,348 103,348 103,348 n.a

Yarn Production from cotton and

polyester/rayon (Unit: Ton) 680,000 720,000 930,000 990,000 1,200,000

Yarns Exports (Unit: Ton) 628,000 720,000 858,500 961,800 1,100,000

Yarn Imports (Unit: Ton) 646,000 695,000 740,000 791,800 820,000

Fabric Production (billion m2) 1.0 1.3 3 3 3

Fabric Imports (billion USD) 7.0 8.3 9.4 10.2 10.0

Source: Vietnam Spinning Association (VCOSA), Customs Vietnam and Post’s estimate

Vietnam exports about 65 percent of the yarns (including cotton yarn) that it produces to international

markets, especially to China, Turkey and South Korea. In CY 2015 yarn export volume was up 12

percent to 961,777 tons, of which 498,100 tons were shipped to China, up 26 percent over 2014; 92,400

tons to Turkey, down 15 percent; and 75,700 tons to Korea, up 12 percent. Yarn exports in the first 10

months of 2016 reached 960,000 tons, up 20% over the same period last year. Post estimates that total

yarn exports in CY 2016 will climb to 1.1 million tons, an increase of about 14% year-on-year.

of 17

Table 2: Vietnam exports of yarns to worldwide markets (quantity in thousand tons)

Reporting Country Calendar Year Year to date

Market share

in the first 10

months of 2015

Market share

in the first 10

months of 2016

2014 2015

Jan –

Oct

2015

Jan –

Oct

2016

%

Change

China 394.7 498.1 412.3 520.6 26.3% 51.8% 54.3%

Turkey 109.2 92.4 78.9 70.4 -10.8% 9.9% 7.3%

Korea (Republic) 67.8 75.7 60.4 92.0 52.3% 7.6% 9.6%

Thailand 31.1 33.4 27.1 28.4 4.8% 3.4% 3.0%

Brazil 24.9 17.1 14.9 20.7 38.9% 1.9% 2.2%

Others 185 209.8 172.5 191.3 10.9% 21.7% 19.9%

Others not listed 45.8 35.2 29.7 36.2 22.0% 3.7% 3.8%

Grand total 858.5 961.8 795.8 959.6 20.6%

Source: Customs Vietnam and Post’s estimate

Table 3: Vietnam imports of yarns from worldwide markets (quantity in thousand tons)

Reporting

Country Calendar Year Year to date

Market share in

the first 10

months of 2015

Market share in

the first 10

months of 2016

2014 2015

Jan –

Oct

2015

Jan –

Oct

2016

%

Change

China 261.0 301.1 243.1 293.0 20.5% 37.5% 41.6%

Taiwan 208.6 192.7 161.0 159.8 -0.7% 24.8% 22.7%

Thailand 80.0 82.8 66.0 66.3 0.5% 10.2% 9.4%

Korea

(Republic) 76.8 79.6 67.0 62.3 -7.0% 10.3% 8.8%

Indonesia 46.7 53.4 42.2 48.3 14.5% 6.5% 6.9%

Others 58.0 69.7 59.0 58.7 -0.5% 9.1% 8.3%

Others not

listed 8.9 12.5 10.7 15.8 47.7% 1.6% 2.2%

Grand Total 740 791.8 649.0 704.2 8.5%

Source: Customs Vietnam and Post’s estimate

Cotton Market

of 17

Vietnam continues to rely heavily on imported cotton to feed its growing spinning industry. The

country’s top five cotton suppliers include the U.S., India, Brazil, Australia and Cote d'Ivoire, which have

make up 70% to 80% of the total cotton supply. However, Vietnam cotton buyers are looking for other

suppliers including Argentina and African countries. Currently, the evidence suggests that import

quantity is still negligible from other suppliers. Vietnam is likely to remain the fastest growing cotton

consuming country because of several factors – including: reaping the benefits from different sources,

increasing cotton yarn imports from international markets, especially from China, Turkey and South

Korea, and taking advantage of the opportunities offered by a series of free trade agreements with

trading partners. In other words, as Vietnam’s textile sector grows - the country will continue to import

more cotton in the short to medium term.

PRODUCTION: (see Tables 4 and 5 for details)

Vietnam’s Cotton Production in MY 2015/2016

Vietnam’s cotton planted area continues to shrink in MY 2016/2017. Post estimates that cotton planted

areas at 1,000 hectares. Additionally, reduced planting of cotton as a cash crop is limiting its significant

strategic role in the economy. As a result, it is becoming difficult to find hard and reliable data on

cotton in ministerial and provincial reports. Declining cotton planted acreage means, Vietnam will soon

become a net importer of cotton. There are several reasons that help explain the dramatic decline of

cotton planted area in Vietnam:

1) International cotton price has dropped in the last few years while local cotton production cost

remained uncompetitive.

2) Cotton is facing increasingly tougher competition from other cash crops including coffee, cashew,

corn, and cassava. These cash crops are more profitable to farmers.

3) Lesser incentives offered by state entities and no commitments made by cotton ginning mills to

guarantee the farmers’ profit

4) Increasing investments in cattle livestock in the Central Highland region is taking over lots of

cultivated land, including those for cotton plantation; and

5) China is importing less cotton and resulting in more exportable supply from international producers

(USA, Australian, India, Brazil and Pakistan)

Vietnam’s cotton production is negligible, less than 1% of the total market demand. The country

depends on imported cotton.

of 17

Table 4: Vietnam’s Cotton Production (from 2013/14 to 2015/2016)

Description 2013/2014 2014/2015 2015/2016* % change 2016/15 vs

2014/2015

Crop area (thousand hectares) 2.50 1.20 1.0 -20%

Crop yield (Ton/HA) 1.39 1.38 1.38 -

Seed cotton production (Thousand tons) 3.47 1.66 1.38 -17%

GOR (%) 36.5 36.5 36.5

Cotton fiber production (thousand tons) 1.27 0.6 0.5 -17%

Bales Equivalent Quantity (1,000 bales,

218kg/bale) 5.82 2.78 2.31 -17%

Source: MARD, GSO, other trade sources and *Post’s projection

Table 5: Vietnam’s cotton production by region, 2013/2014 – 2015/2016

Growing region

2013/2014 2014/2015 2015/2016*

Area Yield Prod. Area Yield Prod. Area Yield Prod.

THA T/HA TMT THA T/HA TMT THA T/HA TMT

North East - - - - - - - - -

North West 0.90 1.30 1.17 - 1.30 - - - -

North Central Coast - - - - - - - - -

South Central Coast 0.40 1.45 0.58 0.50 1.45 0.73 - - -

Central Highland 1.10 1.40 1.54 0.66 1.40 0.92 1.00 1.38 1.38

South East 0.10 1.40 0.14 - - - - - -

Mekong Delta River - - - 0.03 1.40 0.04 - - -

Total cotton seed production 2.50 1.39 3.47 1.19 1.38 1.64 1.00 1.38 1.38

Source: MARD, GSO, other trade sources and Post’s projection

Note:

Prod.: Production; THA: Thousand Hectares; T/HA: Ton per Hectare

TMT: Thousand Tons

(*): estimates

TRADE:

Vietnam Imports of Cotton by Calendar Year and Vietnam’s Primary Cotton Suppliers:

Strong demand for cotton yarns from international markets, especially from China, Turkey and South

Korea, is causing Vietnam to import more cotton to feed its growing spinning sector. Total cotton

imports in CY 2015 were reported at 1.02 million tons or 4.67 million bales, up 34 percent over the

previous CY, which is slightly less than Post’s previous estimates of 1.1 million tons (or 5.04 million

bales) due to a sudden decline in import volume in the last three months of the calendar year 2015.

of 17

Vietnam’s cotton imports in the first ten months of 2016 reached 875,000 tons, slightly down 1.1% over

the same period last year. Post forecasts Vietnam’s total imports of cotton in CY 2016 will be flat at

1.05 million tons.

The United States has topped the list of cotton suppliers to Vietnam for nearly a decade. U.S. cotton

exports to Vietnam in calendar 2015 totaled 432,000 tons for a value of $623.6, up 97% in volume and

59% in value. The U.S. market share went up to 42.6 percent from 28.9 percent in the CY 2014,

reflecting its commitment in dealing with tougher competition from other major cotton suppliers, such

as India, Australia and Brazil. Statistical data in the first ten months of CY 2016 showed that the U.S.,

Brazil, Australia, Argentina and Indonesia experienced positive growth in exporting cotton to Vietnam,

while export volumes for all other countries fell. Refer to Table 6 below for further details:

Table 6: Import Trade Matrix

Country: Vietnam

Commodity: Cotton

Unit: Thousand tons

Reporting Country

Calendar Year Year to date Market

share in

the first

10

months

of 2015

Market

share in

the first

10

months

of 2016 2014 2015

Jan -

Oct

2015

Jan -

Oct

2016

% Change

United States 219 432 419.6 441.0 5% 47.2% 50.5%

Others

India 156 137 118.1 93.0 -21% 13.3% 10.6%

Brazil 80 136 68.5 89.7 31% 7.7% 10.3%

Australia 78 48 43.5 89.4 106% 4.9% 10.2%

Cote d'Ivoire 24 28 38.0 31.2 -18% 4.3% 3.6%

Argentina 16 2 2.1 2.3 10% 0.2% 0.3%

Indonesia 5 3 2.7 3.8 41% 0.3% 0.4%

Pakistan 17 17 15.1 2.6 -83% 1.7% 0.3%

Total of others 376 371 288.0 312.0 8% 32.4% 35.7%

Others not listed 157 211 181.4 120.6 -34% 20.4% 13.8%

Grand total 758 1,014 889.0 873.6 -2%

Source: Global Trade Atlas, Vietnam Customs and Post estimate

of 17

Vietnam imports of cotton by Marketing Year (August 2015-July 2016):

Vietnam imported a record of 998,800 tons (or 4.58 million bales) of cotton, valued at $1.56billion in

MY 2015/2016, an increase of 7 percent in quantity and 1 percent in value over the previous marketing

year. In light of newly operated spinning projects in MY 2016/2017, Post forecasts Vietnam’s cotton

imports will increase to 1.1 million tons or 5.05 million bales in the MY2016/2017, up 10 percent over

MY 2015/2016.

of 17

Table 7: Vietnam’s Monthly Cotton Imports (MY2012/13 – MY 2015/2016)

Unit: Quantity in 1000 tons; Value in $US million

Month 2012/2013 2013/2014 2014/2015 2015/2016 *

Average

price in

2015/2016

(US$/ton) Qty Value Qty Value Qty Value Qty Value

Aug 34.0 65.0 46.7 95.5 42.0 82.3 88.2 145.7 1.65

Sep 32.0 62.0 48.5 100.5 74.6 137.3 102.2 166.2 1.63

Oct 44.0 85.0 63.1 131.4 68.2 122.2 71.9 114.1 1.59

Nov 40.0 77.0 52.4 108.8 59.8 102.6 64.4 101.5 1.58

Dec 36.0 68.0 32.0 62.5 64.6 106.0 64.5 100.3 1.56

Jan 51.0 98.0 49.9 97.1 82.3 130.4 93.7 144.7 1.54

Feb 36.0 67.0 61.5 118.8 50.3 80.5 74.1 116.0 1.57

Mar 66.0 128.0 73.3 145.8 109.2 175.5 93.1 143.6 1.54

Apr 46.0 92.0 70.2 139.5 101.4 161.8 94.2 140.9 1.50

May 50.0 104.0 78.0 158.1 100.6 158.6 88.1 132.3 1.50

Jun 42.0 86.0 65.7 138.3 96.0 155.0 76.0 116.9 1.54

Jul 48.0 98.0 50.0 102.3 86.9 140.7 88.4 138.5 1.57

TOTAL 525.0 1,030.0 691.3

1,398.6 935.9 1,552.9 998.8 1,560.7 1.56

Yearly

Average

Price

(US$/ton)

1.96 2.02 1.66 1.56

% change 49% 19% 32% 36% 35% 11% 7%* 1%

Bales 2,408 3,171 4,293 4,582

Sources: Vietnam Customs and other trade sources.

U.S. Cotton Exports to Vietnam

U.S. exports of cotton to Vietnam skyrocketed to a record-breaking volume of 432,000 tons in calendar

year 2015, up 97% over the previous calendar year. This significant gain helped the U.S. increase its

market share from 28.9% in CY 2014 to 42.6% in CY 2015 and partially offset the decline in exports to

the other markets, such as China and Turkey where U.S. cotton exports in calendar year 2015 dropped

6% to 494,000 tons and 29% to 303,000 tons, respectively. The U.S. cotton success story in Vietnam in

the calendar year 2015 is attributed to various factors including:

cotton imports increased strongly to match a growing demand for cotton yarns from both domestic

and export markets, specifically from China, Turkey and South Korea

major spinners in Vietnam representing Chinese, Taiwanese and Korean investments, continue to

favor U.S. cotton for its stable and premium quality, availability and competitive price

reduced cotton export from India due to falling global prices

of 17

Pakistan’s cotton supply dropped significantly due to lower production caused by damaging

outbreaks of whitefly

Although Vietnam’s import of cotton is forecast to be flat in CY 2016, U.S. exports of cotton to

Vietnam is likely to increase - considering that exports in the first 10 months increased to 441,000 tons,

up 5% over the same period last year.

Table 8: U.S. Cotton Exports to Vietnam

2010 2011 2012 2013 2014 Year to date

Jan –

Sep 2014

Jan –

Sep 2015 % change

Quantity (1000T) 132.9 133.2 126.6 214.7 219.3 419.6 441.0 5%

Value ($million) 248.8 362.3 247.8 401.1 392.9 698.6 706.0 1%

Source: Department of Commerce, U.S. Census Bureau, Foreign Trade Statistics, Vietnam Customs

Table 9: U.S Cotton Exports to Vietnam by Grades

(Quantity in tons)

HS Code

Product Calendar year Year to Date

2012 2013 2014 2015

Jan -

Sep

2015

Jan -

Sep

2016

%

chang

e

520100109

0 Cotton > 1 < 1 1/8 80,905

115,99

9

160,49

9

222,09

9

193,83

8

212,75

4 10%

520100900

0

Cotton Other > 1

1/8 42,474 94,060 55,660

207,94

8

182,40

2

189,68

8 4%

520100102

5 Cotton < 1 2,986 3,878 775 628 628 3,552 466%

520100203

0 Pima >= 1 3/8 212 760 1,810 1,276 655 1,916 193%

140420000

0 Cotton Linters 0 4 7 12 9 11 17%

Grand Total 126,57

6

214,70

1

218,75

1

431,96

4

377,53

2

407,92

0 8%

Source: Department of Commerce, U.S. Census Bureau, Foreign Trade Statistics

Table 10: U.S. Cotton Exports to Vietnam by Grades

(Value in thousand US dollars)

HS Code

Product Calendar year Year to date

2012 2013 2014 2015

Jan -

Sep

2015

Jan -

Sep

2016

%

chang

e

520100900

0

Cotton Other > 1

1/8 85,197

177,29

8

103,08

1

312,97

6

275,59

5

284,18

2 3%

520100109

0 Cotton > 1 < 1 1/8

153,41

8

214,70

1

282,72

6

305,13

2

263,72

4

291,89

3 11%

520100203

0 Pima >= 1 3/8 651 1,792 4,404 3,544 1,545 4,033 161%

520100102 Cotton < 1 8,423 7,301 1,606 863 863 4,334 402%

of 17

5

140420000

0 Cotton Linters 0 3 7 11 8 9 13%

Grand Total 247,68

9

401,09

5

391,82

4

622,52

6

541,73

5

584,45

0 8%


of 17

U.S. cotton exports to Vietnam in MY 2015/2016 reached 421,013 tons (or 1.93 million bales) for a

value of $598 million, a year-on-year increase of 4 percent in quantity and 1 percent in value. The

growth rates were much lower than the previous forecast growth rate of 20% due to lower than expected

growth in yarn exports MY 2015/2016, which was 11% versus 18% in the MY 2014/2015. For MY

2016/2017, Post forecast U.S. exports of cotton to Vietnam to increase about 10% over MY2015/2016.

Table 11: U.S. Cotton Exports to Vietnam by Marketing Year

2011-

2012

2012-

2013

2013-

2014

2014-

2015

2015–

2016

% Change 2016

versus 2015

Aug-Jul Aug-Jul Aug-Jul Aug-Jul

Aug –

July

Quantity (1000 tons) 113.3 194.7 222.7 404.8 421.0 4%

Value ($ million USD) 248.4 350.2 420.0 591.2 598.1 1%


CONSUMPTION:

Vietnam’s domestic cotton consumption continues to increase in order to meet strong demand from its

expanding textile industry. Demand for yarns is strong, both for the export and domestic markets.

Vietnam is one of a very few countries in Asia that have expanded their yarn spinning sector in recent

years. Currently, there are 100 spinning mills with about 6.3 – 6.5 million spindles (equivalent) for an

estimated capacity of over 900,000 tons of cotton-based and man-made yarns in Vietnam. Industry

experts estimate that new and existing spinning projects registered in 2016 will increase the number of

spindles in Vietnam from 6.3 – 6.5 million in 2014/2015 to 8.27 million in 2016/2017.

Vietnam’s cotton consumption has been increasing strongly at an average rate of 22 percent, per year,

for the last five years. Domestic cotton consumption for MY 2014/2015 reached 935,900 tons,

equivalent to 4.29 million bales, valued at $1.55 billion, a sharp increase of 35 percent in quantity and

11 percent in value over the previous year. Vietnam’s cotton imports in MY2015/2016 increase to

nearly 1 million tons, up 7% over MY 2014/2015, but less than 1.17 million tons that Post forecasted in

the annual report. This situation is attributed to increasing Vietnam yarn exports to China, up 17% to

559,600 tons in MY 2015/2016.However, the increase was much lower than the growth rate of 40% in

MY 2014/2015. The table below shows in marketing year, Vietnam’s exports of yarns to its largest

importer- China.

of 17

Table 12: Vietnam’s exports of yarns to China

Month 2013/2014 2014/2015 2015/2016

Aug 28.0 39.3 44.7

Sep 26.9 38.1 42.3

Oct 28.8 37.9 42.3

Nov 27.5 39.6 41.1

Dec 29.4 39.9 44.8

Jan 20.7 39.6 42.0

Feb 27.6 22.2 31.5

Mar 32.0 44.4 53.2

Apr 31.2 42.5 52.0

May 25.0 47.5 52.1

Jun 26.2 43.3 55.7

Jul 37.1 43.9 57.9

TOTAL 340.4 478.2 559.6

Variation in tons 137.8 81.4

% change 40% 17%

Source: Vietnam Customs and Post estimates

Post forecast Vietnam cotton consumption to ramp up by 10 percent in MY 2016/2017 over MY

2015/2016 based on several key factors including: 1) China continues to import yarns from Vietnam at a

lower growth rate due to Chinese yarns becoming more competitive, 2) global cotton price is likely to

stable at a low level, 3) additional spinning capacity.

Higher exportable supplies of U.S. cotton in MY 2016/2017 to the global markets in general and to

Vietnam in particular are expected as production is projected to increase about 10 percent, price is likely

stable at low level and stocks remain flat. These three key elements will definitely support the U.S.

export of more cotton to the growing Vietnamese market. Post forecasts U.S. cotton exports to Vietnam

will reach another record in the MY 2016/2017 at an estimated rate of 10 percent.

PRICES

Table 13 illustrates monthly average price of cotton imported into Vietnam in recent marketing years.

Cotton import price decreased steadily during MY 2015/2016.

of 17

Table 13: Cotton Average Import Price in 2011-2016

Country: Vietnam

Commodity: Cotton

Unit: USD / Kg

Month

Marketing Year

2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016

Aug 1.95 2.76 1.91 2.04 1.96 1.65

Sep 1.93 3.67 1.94 2.07 1.84 1.63

Oct 2.07 2.67 1.93 2.08 1.79 1.59

Nov 2.21 2.82 1.93 2.08 1.72 1.58

Dec 2.55 2.52 1.89 1.95 1.64 1.56

Jan 3.33 2.61 1.92 1.95 1.58 1.54

Feb 3.03 2.33 1.86 1.93 1.60 1.57

Mar 3.40 2.24 1.94 1.99 1.61 1.54

Apr 3.69 2.28 2.00 1.99 1.60 1.50

May 4.18 2.19 2.08 2.03 1.58 1.50

Jun 3.98 2.14 2.05 2.11 1.61 1.54

Jul 3.92 2.24 2.04 2.05 1.62 1.57

Average

Price 3.02 2.54 1.96 2.02 1.66 1.56

Exchange rate: 22,650, local currency / US dollar as

of December 01, 2016

Source: Vietnam Customs Department & Vietnam Commercial Bank

of 17

Domestic Prices:

Price of seed cotton continued to decrease from $0.49/kg in MY 2014/2015 to $0.40 in MY 2015/2016,

down about 8%. The domestic price for cotton continues to be influenced by international prices

because domestic cotton production is negligible - less than 1% of the total cotton consumption.

STOCKS:

Bank interest rates gradually softened towards the end of MY 2015/2016, allowing cotton users and

traders to carry larger inventories. However, stocks-to-use ratio is forecast at a lower rate due to the

following reasons:

Cotton price has rapidly declined as China has reduced cotton imports. There is growing concern

among businesses in the sector that price could decline further. As a result, local spinners do not

want to keep large stocks, which would lower their profitability.

China’s import reduction seriously affects global reserves. In other words, local importers can

easily and competitively source cotton and, therefore, do not need to keep large stocks.

Post estimate the stocks-to-use ratio in MY 2016/2017 remains low at about 15 percent

MARKETING/ POLICY:

Tariff on Cotton

Cotton lint (HS code 5201 and 5203) has a zero tariff but a 5 percent value added tax is assessed.

Tariff on cotton yarn

of 17

Cotton yarn (HS code 5205-5206-5207) has a 5 percent tariff and a 10 percent value added tax.

Biotech Policy and Cotton Production

Commercialization of biotech cotton is not yet approved in Vietnam. However, confined field trails for

biotech cotton are authorized. To date, field trials have not been conducted. For more information on

agricultural biotechnology in Vietnam, please refer to the USDA Gain Report

“Vietnam Agricultural Biotechnology Report” VM4020 dated August 6, 2014.

http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Agricultural%20Biotechnology%20Annual_

Hanoi_Vietnam_8-6-2014.pdf

http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Agricultural%20Biotechnology%20Annual_Hanoi_Vietnam_8-6-2014.pdf

http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Agricultural%20Biotechnology%20Annual_Hanoi_Vietnam_8-6-2014.pdf

of 17

PRODUCTION, SUPPLY AND DEMAND DATA STATISTICS:

Table 14: Vietnam’s Cotton Production, Supply and Demand

Cotton 2014/2015 2015/2016 2016/2017

Market Begin Year Aug 2014 Aug 2015 Aug 2016

Vietnam USDA

Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Area Planted 0 0 0 0 0 1

Area Harvested 1 0 1 1 1 1

Beginning Stocks 498 498 676 601 779 677

Production 3 3 3 3 3 3

Imports 4275 4293 4500 4581 5000 4881

MY Imports from

U.S. 0 1859 0 1931 0 2124

Total Supply 4776 4794 5179 5185 5782 5561

Exports 0 0 0 0 0 0

Use 4100 4193 4400 4508 4900 4835

Loss 0 0 0 0 0 0

Total Dom. Cons. 4100 4193 4400 4508 4900 4835

Ending Stocks 676 601 779 677 882 726

Total Distribution 4776 4794 5179 5185 5782 5561

Source: FAS, Official USDA’s estimate and Post’s estimate

Note for unit measures:

Planted area/Harvest area: 1,000 ha

Yield: kg/ha

Beginning stocks/Production/Imports/ MY imports from U.S/ Total Supply/Exports/Use/Total Domestic

Consumption/Ending Stocks/Total distribution: 1,000 bales (480-lb bale equivalent to 218-kg bale)

vietnam cotton and products update commodity report 2016 · volume and 1% in value over my...

Documents